How Can People Be So Gullible?

The opening lines of this Orange County Register two-part story about Trabuco Canyon mortgage fraudster Jimmy Osborn, who stole more than half a million bucks from his customers from 2003 to 2007, attempt to explain why this con man was so successful.

To be successful, a con man needs to make people believe in him.

Jimmy Osborn had that ability.

Fair enough.  But take a look at this guy!

This is  a face you can trust?

The story makes the point over and over that Jimmy was an extremely persuasive guy. 

Here’s how Osborn operated: He found people, often with damaged credit, who badly needed a new loan. He’d promise he could cut their monthly payments or get them cash out of their homes. He demanded that they send him money in advance, in cash, purportedly for appraisals, loan processing costs and other fees, prosecutors and victims said. He’d string them along for months or years, often telling them to stop paying their current mortgage while he negotiated a new one. In most cases, he never delivered a new loan.

“He made the world very rosy and sunny,” said Kim Koslovic, an Ohio mother of three who turned to Osborn to refinance her house when her husband was out of work. “The man can talk the talk, that’s for sure. Pretty much we handed ourselves over to him, and in the end he pretty much took everything we had, or caused it to be taken.”

Osborn’s dream client had to be Steve Ryancarz, a 62-year-old businessman seeking to refi his luxury Ohio home and also help Koslovic, his fiancee’s daughter, get a new loan on her house.

Here’s how much sway Osborn was able to exert over his victim: Ryancarz sent Osborn money to bail him out of jail when he was arrested for driving without a license. He also sent Osborn money to pay off a purported fine from the Department of Real Estate, according to records Ryancarz provided.

Ryancarz even sent $5,000 to pay for Osborn, his girlfriend and their children to take mini-vacations at the Loews Coronado Bay Resort.

“He said, ‘I’ve done all this work for you. You owe me a favor. How about putting us up for the weekend?’” Ryancarz recalled.

All told, Ryancarz ended up forking over an astonishing $370,000 to Osborn — and both he and Koslovic still lost their homes!

Koslovic’s persistence ultimately helped get Osborn convicted of fraud; he’s now serving 10 years in jail.  But even while the cops were investigating him, Osborn managed to get hired on with several more Orange County-based mortgage companies, all of which apparently failed to conduct background checks on him.

As we’ve seen, oversight of the mortgage industry is weak at best. Until that problem is addressed, consumers are largely on their own.  The lessons:  Deal with a reputable company; shop around; if it sounds too good to be true, it probably is; and if it sounds bad, it probably is.

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